Manufacturing in health sector the next goldmine

Local manufacturing has become a key focus for the Kenya Government because of the sector’s massive potential to uplift lives and livelihoods.

The Government has set an ambitious and achievable target to increase the manufacturing sector’s share of the general economy or GDP to 20 percent from the current 7 percent within the next 10 years.

One promising sector that may be overlooked by many investors but has the potential to drive significant progress towards this goal is Kenya's healthcare sector which is heavily reliant on imports, yet there are Kenyan companies with the capacity to supply goods locally.

For instance, nearly 90 percent of all hospital consumables e.g., bandages and dressings, suturing materials, catheters, syringes, surgical gloves, and blood grouping reagents are imported from China and India, yet we have local startups that are proving Kenyan companies can manufacture quality and affordable consumables.

Encouragingly, with investment from health incubators like Villgro Africa, local firms like Negus Med have achieved success over the past seven years in the manufacturing of a variety of products for the health sector including advanced wound care and theatre textiles.

We have also seen other startups like Revital Healthcare begin manufacturing medical devices such as syringes. To highlight the sector’s potential, it is estimated that the African healthcare market will be worth $259 billion by 2030, and Africa will present 14 percent of health and wellbeing business opportunities, only second to North America which currently holds 21 percent of the opportunities.

This growth can be attributed to an increase in population which is projected to hit 1.6 billion people by 2030, a rising middle-income population, and the emergence of a double burden of disease due to lifestyle-related diseases.

If Kenyan companies can increase their share in these multi-billion-shilling industries, the multiplier effect would be enormous.

Even players along the value chain such as cotton farmers, packagers, distributors, and others would directly benefit from a thriving manufacturing sector.

Inadvertently, the industry’s growth would then give our pensions, investment firms, banks and financial institutions a pool of investible companies. And in turn, this would boost export earnings while cutting back on the import bill.

The good news is that over the last seven years, we have seen the quality of investible companies improve due to a mix of factors including the Covid-19 pandemic which accelerated investment in health innovations.

For instance, in 2020 students from Kenyatta University successfully produced a locally-made ventilator to aid in treating severely affected Covid-19 patients.

Even as the pandemic abates, it is imperative that Kenyan startups and innovators do not lose the manufacturing momentum but rather leverage it to catalyse the development and manufacture of other medical devices.

To fully realise this potential, it is crucial to foster strong partnerships among various stakeholders in the healthcare sector, including customers, the government, investors, and other relevant parties.

This will facilitate the development, support, and adoption of local innovations.

The Covid-19 pandemic and the Russia-Ukraine war have shown why it is important to boost our domestic manufacturing capacity.

This is the best time for Kenya to scale up manufacturing in the healthcare sector by investing in promising startups that have proved that they can sustainably and profitably produce products and devices that can serve the sector’s needs.

Wilfred Njagi is the Co-Founder and CEO of Villgro Kenya.